Analysis: Wolf’s “Fresh Start” Plan Requires Huge Tax Increases

For Immediate Release
Commonwealth Foundation
Contact: 717-671-1901

Wolf’s $4.6 Billion in New Education Spending Would Require
Doubling State Income Tax

Analysis Reveals PA Families Face a Potential 121% Increase in Personal Income Taxes

October 8, 2014, HARRISBURG, Pa.—A new analysis of gubernatorial candidate Tom Wolf’s “Fresh Start” plan reveals that Wolf’s spending and tax proposals—$4.6 billion in new spending on education alone—would result in a potential 121% increase to the state income tax rate, bringing it to a whopping 6.8 percent. That’s almost an additional $600 for the average Philadelphia school teacher and $1,690 for a two income family of $50,000 each.

“Promising funding increases is a good way to get voters’ attention,” said former high school teacher Matthew J. Brouillette, president and CEO of the Commonwealth Foundation, “but the dollars and cents behind Wolf’s proposals have been vague at best. We decided to project how much it would actually cost taxpayers to implement some of Wolf’s proposals—particularly in education—and the results show Pennsylvania’s working families will be paying hundreds, even thousands of dollars out of their own pockets.”

Though state education spending is currently at a record high, Wolf’s campaign has committed to increasing it dramatically, starting with “restoring” temporary federal stimulus dollars which expired in 2011-12—the source of the popular $1 billion education cut myth.

In addition, Wolf has also proposed raising the state’s share of education funding to 50 percent—a level it has never before reached. The state share is currently at 35 percent, leaving a huge gap to achieve 50 percent funding.

These two proposals alone, restoring $1 billion in “cuts” and boosting the state share of education funding to 50 percent while funding school pensions would cost taxpayers an additional $4.6 billion every year.

This figure does not include at least 18 other new spending initiatives proposed by the Wolf campaign, which we generously assume will be paid for by a proposed 5 percent natural gas extraction tax. We make this assumption because Wolf has not indicated how much he will spend on each of the 18 new initiatives.

Who will be paying for the additional $4.6 billion in education spending?

“Instead of soaking 'the rich,' Mr. Wolf's proposals will swamp middle class families’ budgets in a sea of red. Increasing tax rates by more than 100 percent, even with exemptions, will hit Pennsylvania's working families the hardest. And that's just to pay for Mr. Wolf's education spending promises,” commented Brouillette

Tax Analysis

Because Wolf has provided little detail on his two-tiered progressive state income tax proposal, we have used a $30,000 income tax “exemption”—meaning those making $30,000 or less pay zero state income tax—based on comments Wolf made to reporters.

To raise the required $4.6 billion for his education spending proposals under this exemption, the tax rate would have to rise to 6.8 percent—more than double the current 3.07 percent rate.

If Wolf’s progressive tax is found to be unconstitutional, or is enacted without his proposed exemptions, the tax rate would jump from 3.07 percent to 4.44 percent to raise the $4.6 billion. That represents a $1,360 increase for a family with two incomes of $50,000 each.

Matthew Brouillette and other Commonwealth Foundation experts are available for comment. Please contact us at 717-671-1901 to schedule an interview.

Commonwealth Foundation’s analysis of Gov. Corbett’s fiscal year 2013-14 tax proposal can be found here.

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For more information, please contact our director of media relations for the Commonwealth Foundation at 717-671-1901 or [email protected].

The Commonwealth Foundation, founded in 1988, crafts free-market policies, convinces Pennsylvanians of their benefits, and counters attacks on liberty.